Easing oil prices prompt FTSE slump

A fall in the cost of oil from its recent record highs helped take the steam out of the FTSE 100 Index today.

Heavyweight oil stocks BP and Royal Dutch Shell both lost around 2% of their market value, contributing to the Footsie falling 21.4 points to 5271.3 by mid-morning.

The cost of a barrel of US crude oil now stands at around $63 after hitting a peak above $67 last week. The fall follows data showing energy demand declined in the United States.

The Footsie has slipped back from its recent three-year highs by losing around 80 points in the last few sessions, and today looked set to rack up its sixth consecutive session of losses.

Shell was the heaviest blue-chip faller today, losing 38p to 1845p while BP weakened 11.5p to 625p.

In contrast, banking group Royal Bank of Scotland was doing its best to lift spirits after a ground-breaking deal for a stake in a Chinese bank boosted its shares.

RBS was the second highest climber today, up 43p to 1650p, after announcing it was part of a consortium buying a 10% stake in Bank of China.

This did little for its rivals, which were all in the red. Halifax to Bank of Scotland group HBOS was the sector’s biggest faller, losing 12.5p to 870.5p. HSBC slipped 10.5p to 898p and Barclays weakened 4p to 559p.

A string of insurers were also out of favour with Legal & General the hardest hit, down 1.5p to 109p. It was followed by Old Mutual, which lost 1.5p to 131.5p.

Among firms reporting today, engineering group Weir edged 2.25p lower to 357.75p despite posting a 1.5% rise in underlying profits to £24.4m (€36m) in the six months to June 30, hitting the top end of expectations.